Boulder council gives final approval to Xcel acquisition

City to begin negotiations as discussion of alternatives continues

An Xcel Energy substation sits behind chain-linked fence at 75th Street and Lookout Road in Gunbarrel. The station is one of two in unincorporated Boulder County that the city of Boulder plans to acquire should it establish a city-run energy utility. (Cliff Grassmick / Camera file photo)

Boulder officially set itself on the path toward creating a municipal electric utility Tuesday night, when the City Council voted 6-3 to approve an ordinance that authorizes the purchase of Xcel Energy's assets.

It was the third and final vote on the acquisition ordinance, as well as the third and final vote on an ordinance declaring that the case for a municipal utility meets the requirements built into the city charter. Those requirements include that the utility offer more renewable energy than Xcel at similar or lower rates.

The vote does not mean Boulder will form a municipal energy utility. It means that in 30 days, when the ordinance goes into effect, city officials will start negotiations with Xcel to purchase the poles and wires that distribute electricity around Boulder, six substations and a high-voltage transmission line that encircles the city.

If, as expected, Xcel does not want to sell the system to Boulder, the city could proceed to condemnation.

At the same time, city and Xcel officials are in talks to flesh out possible alternatives to municipalization that would provide cleaner energy to Boulder. Those proposals consist of new products and services that Xcel would offer throughout the state.

City officials expect to make a recommendation on those alternatives in December. They said the earliest they would move toward condemnation would be January.

After two lengthy debates at meetings July 24 and Aug. 6, the City Council made its final vote with no discussion.

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Councilman Ken Wilson, who opposes the creation of a municipal utility, explained his position in an email to the council before the meeting. He said he had numerous concerns with a third-party evaluator's report, which largely supported the city analysis.

"We are essentially being asked to take the Power Services report on faith," he said. "There is no forum for cross examination of Power Services personnel by experts who have had access to the same information. This would never be acceptable in a Public Utility Commission docket, where multiple intervenors, their attorneys and experts can review all the information and cross examine witnesses."

Wilson and council members Suzy Ageton and George Karakehian voted no.

Xcel Energy spokeswoman Michelle Aguayo said the vote was not unexpected but was still "unfortunate."

"We have identified numerous deficiencies and overly optimistic assumptions used in the city's analysis and we remain convinced that Xcel Energy can help Boulder accomplish its energy and environmental goals faster, better, and at a lower cost than through the expensive and risky path of municipalization," she said in an email. "Notwithstanding this vote, Xcel Energy will continue to work with the Citizen Task Force and the city to demonstrate this fact."

The City Council also voted 6-3, along the same lines as the municipalization vote, to place a utility debt limit charter amendment on the ballot.

That measure would put a $214 million limit on debt that could be issued to buy Xcel's system and pay stranded costs, but would not address the total debt limit of the utility. It also would allow county residents who are customers of the utility to serve on the utility's advisory board.

The city-backed charter amendment is designed to compete with a citizen initiative with support from Xcel that would require a vote on the total debt limit in an odd-year election and that affected county residents get to vote in that election.

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